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Form 100. Personal Income Tax Declaration 2019

7,4,1,5. Small businesses

A company is considered to be small when the net amount of the previous year's turnover was less than 10 million euros.

If the immediately preceding tax period had lasted less than one year, or the activity had been carried out for a shorter period, the net amount of the turnover will be increased to one year.

If the company was newly created, the net amount of the turnover must refer to the first tax period in which the activity is actually carried out, increasing the figure per year if the period of exercise had been less than 12 months.

To determine the net amount of the turnover, all the economic activities carried out by the taxpayer will be taken into account.

When a natural person alone or jointly with the spouse or other natural persons united by ties of kinship in a direct or collateral line, consanguineous or by affinity, up to the second degree inclusive, are in relation to other entities of which they are partners In some of the cases referred to in article 42 of the Commercial Code, the net amount of the turnover will refer to the group of people and entities belonging to the group.

Temporal scope of application of tax incentives when the small company exceeds 10 million euros in turnover

Small companies that reach or exceed a turnover of 10 million euros in a tax period may, however, continue to apply the tax incentives of their special tax regime during the three tax periods immediately following that one, provided that have met the conditions to be considered as small in size both in that period (in which it reaches or exceeds the limit of 10 million) and in the two tax periods prior to the latter.

This measure also applies to the case in which said limit is exceeded as a result of a business restructuring under the tax regime established in Chapter VII of Title VII of the LIS, provided that the intervening entities that have carried out such operation meet the conditions to be considered as small in size both in the tax period in which the operation is carried out and in the two tax periods prior to the latter.

Tax benefits

Small companies can benefit from a special depreciation regime for certain elements:

  1. Freedom to depreciate

    1. For employment-generating investments , in the form and conditions established in article 102 of the Corporate Tax Law.

    2. For investments of low value the freedom of amortization for investments of low value that the previous consolidated text of the Corporate Tax Law regulated in its article 110 only for small entities has been replaced in the new LIS for a similar benefit applicable to all taxpayers of the aforementioned tax and applies to new tangible fixed assets, whose unit value does not exceed 300 euros, up to the limit of 25,000 euros referring to the tax period. If the tax period has a duration of less than one year, the indicated limit will be the result of multiplying 25,000 euros by the proportion between the duration of the tax period with respect to the year (article 12.3 LIS).

  2. Accelerated depreciation

    1. The new elements of tangible fixed assets and real estate investments, as well as the elements of intangible fixed assets , may be amortized by multiplying by 2 the maximum linear amortization coefficient provided for in the officially approved amortization tables.

    2. The elements of intangible assets whose useful life cannot be estimated reliably and the goodwill may apply the percentage of 150% to the resulting amount deductible from applying to them what is established in article 12.2 of the LIS. In accordance with the provisions of said article, the amortization will be deductible with the maximum annual limit of one twentieth of its amount (5%).

    3. Transitory rules: for the assets to which the transitional regime provided for in the thirteenth transitional provision of the LIS is applicable, that is, for those that, in tax periods beginning prior to January 1, 2015, were applying a different amortization coefficient to which they correspond by application of the amortization table provided for in article 12.1 of the LIS, the new useful life of the element must be determined based on the maximum linear coefficient provided for in the table established in the LIS, to, once determined, multiply times 2 the coefficient by which it will be amortized during the remaining tax periods until completing its new useful life, on the net tax value existing at the beginning of the first tax period that begins on January 1, 2015.

  3. Financial leasing

    In relation to the assets acquired under the special financial leasing regime, the part of the installments that corresponds to the recovery of the cost of the depreciable assets is considered a deductible expense, with a limit of three times the linear amortization coefficient according to officially amortization tables. approved. The excess will be deductible in successive tax periods, respecting the same limit.

  4. Losses due to impairment of credits due to possible insolvencies of debtors (art. 104 Corporate Tax Law)

    Taxpayers who determine the performance of their activity in the direct estimation regime may deduct the loss due to deterioration of credits to cover the risk derived from possible insolvencies up to the limit of 1% of the existing debtors at the end of the period. tax. For these purposes, those debtors for whom the loss due to impairment of bad debt credits had been individually recognized and debtors whose losses due to impairment are not deductible in accordance with article 13.1 of the LIS will not be included.

  5. Transitory rules: Amortization of assets subject to reinvestment by small companies

    The owners of economic activities that determine the net return by the direct estimation method and were applying, prior to January 1, 2015, the amortization of assets subject to reinvestment that was regulated for small companies by article 113 of the consolidated text of The LIS, approved by Royal Legislative Decree 4/2004, of March 5, may continue its application, with the requirements and conditions established in that article. For these purposes, the aforementioned article allowed the amortization of the elements of the tangible fixed assets and real estate investments subject to economic exploitation in which the reinvestment of the total amount obtained in the onerous transfer of elements of the tangible fixed assets and the real estate investments had materialized. also affected, depending on the coefficient resulting from multiplying by 3 the maximum linear amortization coefficient provided for in the officially approved amortization tables.